The ratings assigned to FWEL-II take into account its strong ownership profile with Fauji Group, through Fauji Foundation and Fauji Fertilizer Bin Qasim Limited, holding major stake in the company. IIF Wind Two Limited (CapAsia - a Malaysian private equity firm) and Tapal Group are the other major sponsors of the company. The project is established under the Policy for Development of Renewable Energy for Power Generation, 2006 which offers a guaranteed internal rate of return, cost indexation and pass-through tariff structure. Moreover, presence of reputable operational and maintenance contractor carrying sound track record mitigates the associated operational risk.

The energy is purchased by National Transmission and Dispatch Company Limited through its Central Power Purchasing Agency (Guaranteed) Limited under the Energy Purchase Agreement; payment obligations of the power purchaser are guaranteed by the Government of Pakistan. With power generation operation of the plant is in process since end-2014, actual electricity generation of the plant has been lower than the benchmark generation due to lower wind; however, the associated risk is passed on to the power purchaser. Moreover, the risk of non-evacuation also rests with the power purchaser.

Total project cost amounted to US$ 126.6m. The project had been financed by 72% debt and 28% equity. Debt financing was arranged through a forward lease agreement with Islamic Development Bank, payable in 19 semiannual installments starting from January 2015. Going forward, FFO is projected to remain stable on an annual basis while the same is expected to remain sufficient for timely debt repayment.

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 or Mr. Maimoon Rasheed at 042-35723411-13.

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